Welcome to Harpenden, where our open-minded approach to lending makes a big difference.

Transcription

1 Lending Criteria Guidelines Welcome to Harpenden, where our open-minded approach to lending makes a big difference. From mortgage questions to mortgage answers, these guidelines explain our lending criteria to help you with your enquiries. Our mortgage products are available for purchase, re-mortgage and short term lending There is no upper age limit placed on applicants that are looking to borrow into later life We do not apply Early Repayment Charges (ERCs) We will consider requests to raise finance against unencumbered property We lend in England and Wales only Apply Qualify Buy This document is for use by authorised intermediaries only.

2 Harpenden Building Society Mortgages The following lending criteria applies to our Family and Specialist Mortgages: MORTGAGE TYPE DESCRIPTION MINIMUM PURCHASE PRICE/VALUE OF THE PROPERTY MINIMUM LOAN AMOUNT MAXIMUM LOAN AMOUNT MAXIMUM LOAN TO VALUE MAXIMUM LOAN TERM Family Mortgages Residential Owner Occupied/ Lending into Later Life Guarantor Second/ Holiday Home Loans for house purchase, re-mortgage or release of equity, where the property will be occupied by the borrower as their primary residence Up to 4 applicants considered and not all applicants have to reside in the property Accepted. Please contact your BDM to discuss (see reverse for contact details) 150,000 75,000 3,500, ,000 75,000 3,500,000 Property used by the applicant or their family and where there is no reliance on any rental income derived from the property to service the loan. These will be regulated mortgages 150,000 75,000 2,000,000 Repayment 35 years Interest Only 35 years Repayment 35 years Interest Only 35 years Repayment 25 years Interest Only 25 years Self Employed/ Contractors/ Professionals Loans for house purchase, re-mortgage or release of equity, where the property will be occupied by the borrower as their primary residence Up to 4 applicants considered and not all applicants have to reside in the property 150,000 75,000 3,500,000 Repayment 35 years Interest Only 35 years Specialist Mortgages Buy To Let/ Consumer Buy To Let Holiday Let Bridging Loans for purchase, re-mortgage or release of equity from property held as an investment, where the rental income from the property services the loan Assured shorthold tenancies (minimum 6 months, maximum 12 months) Houses in multiple occupation are not accepted Schedule of BTL properties to be submitted showing outstanding loans Limited appetite for new build flats outside local area (South East of England), particularly in city centres Max exposure 2m, or three properties 100,000 No minimum 2,000,000 Property held as an investment, where the rental income from the property services the loan 100,000 No minimum 2,000,000 Monthly interest payments are required Customer to take independent financial and legal advice Available for the purchase of residential property One year term Minimum Equity 250k Repayment 75% Interest Only 70% Part & Part 70% Repayment 75% Interest Only 70% Part & Part 70% Repayment 25 years Interest Only 25 years Repayment 25 years Interest Only 25 years 325,000 75,000 2,000,000 60% Interest Only 1 year Residential Development/ Self Build Local area preferred (South East of England). For other areas please contact your BDM to discuss Small residential developments only considered. Maximum of three properties Conversion/refurbishment projects considered (houses converted into flats or vice-versa) No business start-ups Drawdowns against revaluations by the Society s valuer Cash flow forecast, Business Plan Agreed reductions from plot sales, subject to re- valuations Detailed specification to be provided Detailed residential planning consent to be granted for new builds Residential development appraisal to be obtained Society to appoint own solicitor 150,000 75,000 2,000,000 65% Interest Only 3 years Deposits Savings from different sources Equity from residential or other properties Gifted deposit from parents Up to date savings statements Immediate Family Letter from the solicitor confirming the amount Written confirmation of the gift

3 Interest Only Repayment Strategy The following Interest Only strategies can be considered: Sale of Residential Property Sale of Additional Property Development/ Upgrade and Sell Overpayments from Income & Bonuses Investment Inheritance Re-Mortgage to Another Lender Minimum Property Value - 250k Current equity in additional property sufficient to repay HBS mortgage LTV on additional property is under 50% and equity exceeds 150k Property is in an area with a track record of strong demand/property values Maximum LTV - 65% Maximum of 70% of current value if a lump sum invested in equities 100% of current value if savings in cash ISA or bank/building society savings account Maximum 70% of projected end value if regular investments/savings for at least the last 12 months Probate already granted Minimum Property Value - 250k Convert to Repayment Minimum Property Value - 250k Endowment Pension Lump Sum With profits policy - up to 75% of the current surrender value Unit linked policy - up to 50% of the current surrender value Endowment policy within 10 years of maturity Assignment of policy Minimum age 55 years Pension fund minimum value - 500k Maximum loan 75% of the allowable lump sum Repayment Methods Capital and Interest (Repayment mortgage) Interest Only Part Repayment & Part Interest Only

4 Income The following types of income are acceptable subject to the related evidence being provided: Employed Applicants 3 months payslips and P60 2 most recent P60s for any bonus payments, overtime or other allowances Self-Employed Tax Calculations and Tax Year Overview for the 3 most recent years, along with 3 most recent years accounts. Business Plan/detailed explanation if the business has not been established for 3 years, is developing or the results fluctuate Contractor Lending into Retirement Retired Maintenance Investment and Savings Income Rental Income Future Let Trust Income 12 months contracting is usually required but less can be considered if experienced in this profession. Minimum 3 months contract remaining Affordability based on 5 days/46 weeks Recent pension projections Pension statement or P60 for each individual pension A copy of the signed Court Order or 6 months bank statements demonstrating the income, along with a letter confirming the informal arrangement by the person paying the maintenance 3 most recent Tax Calculations and Tax Overviews from HMRC ISAs, PEPs, Pension drawdowns 3 most recent Tax Calculations and Tax Overviews from HMRC Assured Shorthold Tenancy agreement We require confirmation from the Society s Valuer regarding anticipated rental income (for proposed Security property) An appraisal letter from a local letting agent 3 most recent Tax Calculations and Tax Overviews from HMRC Affordability Income multiples will be used as part of our initial assessment. Detailed income and expenditure analysis will be carried out once the full application is received. When assessing affordability, the Society will take account of: The income of the applicant, net of income tax and national insurance The applicant s committed expenditure, basic essential expenditure and basic quality-of-living costs Affordability throughout the term at the Society s Stress Test Rate Future changes to income and expenditure Income/expenditure analysis will be based on independent information Up to four applicants can be considered for a mortgage. The highest three incomes will be assessed.

5 Financial Statements/Information Financial information should be supported with the evidence detailed below: Current Bank Account Credit or Store Card Personal Loan, Car Finance or Other Finance Agreement Assets 3 months most recent personal bank statements for all active current accounts 2 months detailed statements even if paid in full each month OR Certified full Experian/Equifax report confirming 12 months payments Latest annual statement confirming 12 months repayment history and current balance OR Certified full Experian/Equifax report confirming 12 months payments Savings, Investments, ISAs/PEPs, Unit/Investment Trust/OEICs, Shares, Pension Funds, Business Assets - recent statement or valuation Residential Status Residential status should be verified with the evidence detailed below: Tenants Existing Mortgage (Residential and Buy To Let) We require a statement for the last 12 months showing all rental payments Most recent annual mortgage statement confirming 12 months repayment history and current balance Where the mortgage has been redeemed in the last 5 years, please provide a redemption statement or detailed annual statement Certified full Experian/Equifax report confirming 12 months payments Impaired Credit The Society does not usually accept applications from: Any applicant with County Court Judgements totalling more than 500 during the past three years Any applicant who has been in serious arrears (90 days or more overdue) during the past two years Any applicant who has been subject to an IVA at any time within the last three years Property Type The Society will consider the following types of property: Acceptable Not Acceptable Tenure Acceptable All conventional types of construction brick/tile/stone/slate Flats converted or purpose built Concrete/steel-framed houses Properties where high-alumina cement has been used in the construction Pre-cast, reinforced concrete houses designated as defective under Housing Act 1985 Freehold, Studio or Bedsit flats Multiple occupancy property Property affected by subsidence Houseboats Any properties that the Society s valuer does not consider suitable as security Freehold Leasehold (must have at least 40 years remaining at the end of the mortgage term) Share of freehold

6 Get in touch with our Broker Partnership Team Jean Errington Business Development Manager I Industry Experience: Jean has worked in the mortgage industry as a broker and lender for over 20 years. She is also an experienced underwriter, qualified to level 4. What they say about Jean: Jean s brilliant working knowledge helps brokers to best manage complex applications. Graeme Aitken Business Development Manager I Industry Experience: Graeme s extensive knowledge of the mortgage market comes from over 25 years of working in financial services. What they say about Graeme: Graeme translates complex mortgages into a language that s clear to both the broker and their customers. Andrew Foster Business Development Administrator I Industry Experience: Supporting broker - lender relations and industry analysis. What they say about Andrew: Andrew is always quick to provide assistance in a professional and customer-focused manner. If your application is being processed please contact our Mortgage Processing Team: Direct Line: Fax number: applications@harpendenbs.co.uk Mardall House, 9-11 Vaughan Road, Harpenden, Hertfordshire AL5 4HU

7 Additional Borrowing Additional borrowing is available for property improvement and investment purposes: Residential Owner Occupied Buy to Let Let to Buy/Consumer BTL Second/Holiday Home Holiday Let Residential Development/Self Build Application criteria No maximum age limit. Minimum age limit is 18 years. The Society will assess affordability for the whole of the mortgage term. Where the term of the mortgage extends beyond the intended retirement age of the customer, or State Pensionable age, verification of the expected pension and/or other income will be required Customers choosing to work beyond State Pensionable age will be accepted, providing the intended retirement age is feasible given the nature of their job Solicitors The Society instructs solicitors that use the Council of Mortgage Lenders (CML) Lenders Handbook. Although it does not maintain a panel for residential property transactions, it is prepared to instruct a borrower s solicitors to act on its behalf subject to: The firm having a minimum of three regulated partners (SRA Approved Managers); and The property having no unusual features or characteristics that would require specialist knowledge The Society will not instruct sole practitioners or firms with fewer than three principals for any transactions relating to a mortgage (purchases, re-mortgages or sales). If a borrower wishes to use a firm with fewer than three principals, the Society will instruct the Society s solicitors to act on its behalf. This document reflects the Society s current approach to mortgage lending. This document is available on our website All applications will be subject to the Society s full manual underwriting and credit search, which may result in an application being declined, despite appearing to meet the Society s lending criteria. Head Office: Mardall House, 9 11 Vaughan Road, Harpenden, Hertfordshire AL5 4HU Tel: enquiries@harpendenbs.co.uk Website: Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Firm reference number: Mortgage products are regulated by the Financial Conduct Authority except Second/Holiday Homes, Buy To Lets and Residential Developments where the borrower does not reside on site during the development period. V1/NF/07/2017